About our reporting

This report covers Xstrata Group’s sustainability performance for calendar year 2010. It is our seventh annual Group Sustainability Report.

Scope

This report covers all managed operations – i.e. those over which we have direct control and set and implement policy and standards. Xstrata also owns an interest in several operations where we influence and monitor policy and standards but have no direct management control. A senior Xstrata manager sits on the Board and relevant committees of non-managed operations and ensures they operate to the standards set by our sustainable development framework.

Our commodity businesses publish regional, divisional and, in some cases, site-specific annual sustainability reports. See all current and previous reports on our website at www.xstrata.com/sustainability/reports.

Audience

Our sustainability reports provide a broad range of information about our sustainable development policies, practices and performance. They are aimed primarily at existing and prospective shareholders, as well as socially responsible investment analysts and investors.

Other audiences include governments, inter-governmental bodies, industry organisations, trade unions, employees and their families, communities associated with our operations, contractors and contracting partners, development and non-governmental organisations (NGOs), suppliers, customers, joint-venture and business partners and the media.

Scorecards and targets

As in previous reports, we have included a scorecard showing how we performed against 2010 targets and targets for 2011. Group-level performance summary and targets are available, while the compilation of all the scorecards and targets for the commodity businesses are also available. We reorganised this report in this manner to reflect its focus on Group-wide sustainability material issues and performance.

Data

Consolidated data in the report cover all managed operations. We also report limited material data such as critical safety incidents from non-managed operations, and refer to non-managed operations in the narrative and case studies as appropriate.

We report complete data totals for managed operations on a 100% basis rather than proportional amounts that are based on the percentage of ownership. All managed operations record data in Xstrata’s proprietary online sustainability database, which is validated at commodity business and Group level. Our comprehensive performance data sheet is and summary key data are available.

All data include continuing operations and data for operations acquired during the year from the date of acquisition unless otherwise stated.

Conversion factors and sources for energy and greenhouse gas emissions data have been independently verified by Environmental Resources Management (ERM).

Over time, our data collection system continues to mature and improve, which results in better data accuracy. We strive to report on data trends over time; however, for some metrics this not possible.

We include a number of restatements in this report. The metrics subject to restatement are training hours; minor environmental incidents; energy consumption; water withdrawal, recycling and discharge; air emissions; and community complaints. There are a number of the restatements relating to water. These have resulted from improvements to the reporting definitions and continuing improvements in the reporting of water metrics. Restatements are identified with an asterisk on the appropriate graphs (see, for example, training hours chart). Restatements are generally corrections of previous errors that are discovered during the process of compiling 2010 data. Unless otherwise stated all dollar amounts refer to US dollars.

Acquisitions and disposals

In February 2010, Xstrata completed the sale of the Group’s 70% interest in El Morro SCM, the holder of the El Morro copper-gold exploration project in Chile.

In March 2010, Glencore exercised its option to acquire the Prodeco coal operations.

In June 2010, the Kidd Metallurgical copper and zinc plants in Ontario, Canada were permanently shutdown.

In August 2010, the Group announced a cash offer for Sphere Minerals Limited (Sphere) and Xstrata gained control of Sphere, in November. Sphere is a West African focused iron ore company with interests in three iron ore projects in Mauritania. Further details are available in our annual report.

Defining report content

We apply the principles of inclusivity, materiality and responsiveness as defined by the AA1000 AccountAbility Principles Standard 2008 (AA1000APS) in our reporting. We are committed to being accountable to our stakeholders; see discussion of stakeholder engagement.

In our reporting, we prioritise topics or issues with the potential to affect the long-term success of our business or the sustainability of the economies, environments and communities in which we operate – i.e., our most material issues. We also strive to fully address those topics that our stakeholders perceive to be most material. We aim to provide a complete and balanced view of our performance that includes challenges as well as successes.

To identify the material issues for Xstrata and our shareholders, we review many sources of information in determining the structure and content of this report and the relevance of the issues it covers.

These sources include:

• The Xstrata Business Principles, Sustainable Development Framework, policies, procedures and audits;
• The results of our business risk assessment process;
• Feedback on our sustainability performance and reporting, as well as industry or company-specific issues raised by employees, contractors, customers, suppliers, business partners and investors, communities, NGOs and the media through our engagement processes;
• Key topics and challenges reported by peer companies or raised by industry associations;
• A review of key issues covered in the media for Xstrata and its sector peers; and
• External initiatives and best practice guidelines, including;
  • The Global Reporting Initiative (GRI) G3 guidelines and its Mining and Metals sector supplement;
  • The International Council on Mining and Metals (ICMM) SD principles;
  • The United Nations Global Compact;
  • The Millennium Development Goals;
  • The Dow Jones Sustainability Index questionnaire;
  • UN Universal Declaration of Human Rights;
  • The Voluntary Principles on Security and Human Rights;
  • ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy; and
  • OECD Guidelines for Multinational Enterprises.

Applying the GRI

This report meets application level A+ of the GRI G3 Sustainability Reporting Guidelines, including the Mining and Metals sector supplement. The GRI Index is availble here.

International Council on Mining and Metals

Xstrata plc is a member of the ICMM, and like all members we have committed to the ICMM Sustainable Development Framework. We have included the ICMM assurance requirements within the scope of our external assurance programme to provide independent assurance that the ICMM commitments are met.

Independent assurance

Ernst & Young has independently assured Xstrata’s reported application of the GRI G3 Sustainability Reporting Guidelines, and the AA1000APS principles of materiality, inclusivity and responsiveness in preparing this report. Ernst & Young also reviewed the alignment of Xstrata’s policies and standards with the ICMM sustainable development principles.

See the signed assurance statement beginning on page 100 of the Sustainability Report 2010.